awaiting wyoming, the jackson hole symposium is kicking off as investors seek clarity from the fed amidst mixed messages from officials. ready to drop, templeton investment says helicopter money in japan could come as soon as next month. and -- citizen,as an american i would not vote for hillary clinton if you paid me. in fact, i would not vote for hillary clinton if she paid me. farrage joinsel donald trump on state a rally in mississippi, urging supporters to vote against the quote
establishment. ♪ welcome to countdown everybody. i am anna edwards. 6:00 in london. many people focused on what is happening in wyoming over the weekend. that seems to be the focus of the market's attention, eerie calm as we wait for janet yellen who will be speaking, there. lettuce for the risk radar on various asset classes overnight, the dollar rally the theme, a four-day street. fairly flat now, how hawkish will janet yellen be? even if she is dovish about the long-term, how contrasting will central-bank policy seem to be across the atlantic? and will that do to the yen? questions as we go towards jackson hole.
the shanghai composite in there for you because it is one of the few asset classes that we are seeing, down by 1%. the broader asian picture is fairly flat, illustrating with the msci asian-pacific questions around shanghai, will be government decrease financial markets once again. crude oil in there up by one quarter of a percent, fairly sluggish at 46.88. holding your the one-week low. stockpilesd u.s. across the bloomberg, weighing on oil prices. let us get the bloomberg first word news. here a shery ahn shery: the helicopter money will be japan's next big experiment and it could happen next month. the executive chairman of templeton emerging markets says provisional in easing measures have just made people save, rather than spend or borrow.
he added that that combined with a stronger yen of force the bank of japan to contemplate a policy, or completely rejected. >> they will engage in helicopter money with great care and great reluctance, and of course if they do it to carefully they will not have any side effects to the dilemma they are facing. a new report says investors pulled more than $25 billion and hedge funds last month, the biggest redemption since february 2009. total outflows this year are close to 56 billion, driven by performance. hedge funds are mounting criticism from climat clients, g to keep pace with stock market benchmarks. and it is almost time to short the crude rally, but according to the new ceo of phibro, there was once a large independent
u.s. refinery. simon greenfield said traders should short wti crude at 50 dollars a barrel. and he says members of opec will not cut out outlet. age appeared at a rally with donald trump in jackson, mississippi. decisionof britain's to leave the european union as a positive example, and urged supporters to get out to vote against the quote establishment. nigel: if you want change in this country, you better get your walking boots on. you better get out there campaigning. and remember, anything is possible if enough decent people are prepared to stand up against the establishment. thank you very much. good evening. facerump: the issues we
here in america are similar to the issues faced in britain oring their referendum, membership in the european union. world'sne of the longest running insurgency is over after columbia returned a deal with farc revels. and the agreement legitimizes the rebel political wing, legitimizing the upcoming weapon. columbia says the dividend will at a full percentage point to grow. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 100 20 countries. you can find more stories on the bloomberg at top . i am shery ahn. anna: shery ahn in hong kong. sally in hong kong, with details on the trading session. and an eerie call seems to be an apt phrase, apart from chinese
equity markets perhaps. juliette: that is right, and. the waiting game continues, all week, a load of analysts saying what happens if janet yellen does not provide the impetus that markets are looking for? but there is little bit of calm, flat movement on the nikkei and in hong kong. shanghai seeing reports that they may actually, or china i should say, may hold meetings to discuss the surging property includinghanghai, restrictions on bank loans for developers. we have seen a bit of weakness coming through following the lunch break, just coming out of that at the moment. 1.1%.market down by as i mentioned in hong kong, things ok. although we have seen some downward pressure and energy pressures, disappointing earnings numbers, listed. and in australia, those are
weaker, down by half of 1%. pretty flat though there on the nikkei and original index as well. having a look at some of the movers we are watching today in asian trade, galaxy just came through during the lunch break in hong kong with second-quarter earnings which were up 22% from a year earlier. this is a lot more than what analysts were looking for, thanks to the opening of a number of new casinos. ofng very well in australia, the most in 10 months as it exits the underperforming market business answering to see a bit of a turnaround in food sales in australia. and if you are an olympic gold medalist, you will get free flight for life from air asia. that stock still coming under pressure on the back of yesterday's news, the energy players on hong kong following the earnings. anna: juliette, thank you very much. i sure hope we can find a sport weekend win at.
nice price. juliette saly and hong kong. the jackson hole symposium kicks off in wyoming and investors will be listening for clues about the future of interest rates with a market pricing in a hike in the end of the year, bloomberg's michael mckee has this report. fed as: the kansas city been holding the animals impose the him for four years, and 38 of them, the academic key is to not attend. twice, ben bernanke laid out that policy, and that has wall street wondering what janet yellen will do with her keen it onfriday that keynote friday. she will preserve options. the fed want to see the economic data from august and september before has to make a decision at the next meeting on september 21. we have had said vice chair fisher and bill dudley just a september meeting is live, but whether or not janet yellen
suggest they are imminently close to interest rate increase is something we will find out on friday. michael mckee, bloomberg, jackson hole, wyoming. for: and it to him tomorrow our special coverage of the jackson hole economic symposium, including james bullard and jerome powell. friday will be full of plenty of conversation coming out of jackson hole. let us think about what we are going to hear, build on what mike mckee was reporting. let's bring in the chief economist, who joins us on the set in london. great to have you on the program, megan. i have had a few people contrast they will be might hear from janet yellen around the short-term and the direction of interest rates in the u.s. and the more long-term, maybe hawkish about the short-term, dovish about the longer-term. we will read into that. megan: i think it is important to remember these fed conferences are incredibly
academic. we had a few instances where they have actually provided some policy inside. i think it is pretty unlikely will get anything from janet yellen. as michael mentioned, we are from, theslew of data meeting and the most will probably get is data dependent. and they will be watching the data carefully. i think that the market is slightly disappointed that we saw the dollar flat today. i don't think it will get much chance from janet yellen's speech. anna: we have a great story on the bloomberg day, master of the aiverse, lummox by the fed, lot of expectation in the bottom market particular. i have a chart coming from votto suggesting the, way the bond market has not responded in maybe the way the foreign exchange markets have, some of the more hawkish comes we have had coming through from fed officials.and that leaves markets poised for any clues we get from janet yellen to bridge the gap in understanding about
where the fed goes. what that could all be for naught. megan: i think we will continue leaves.the tea budget jan has never put yourself in a corner when she did not need to. and i don't think she needs to prime, the market at the moment particularly given how much data we have at the moment. the fed does not know what they're doing just yet. but she will be doing just that, say something for everyone and get some wiggle room. rightly thisnt out is an academic a dent, designing the monetary framework for the future. it sounds like an absolute symposium. but they do sometimes, as mike was suggesting, throw up comments about policy. how much are we learning about divergent policy across the atlantic, or perhaps more importantly across the pacific, because there are many waiting around the world to feel how divergent u.s. policy can get from the rest of the world? megan: i think the most
important discussion will be the new framework for monetary policy going forward. at a medium to long-term, i think there is a lot of convergence on that in that the fed, ecb, boj all think we need a new framework for monetary policy, but another know exactly what it should look like. anna: what does that mean? what is broken at the moment unemployment,ng and a low interest rate world, we have to suggest other things. some suggested we needed target higher inflation. right now is a great time to increase the target when you cannot hit the lower one. in the short-term, that is not really a credible option. but now is the time to discuss that. targeting nominal gdp is another idea. i don't think that is materially different for central banks from what they are already targeting, officially or unofficially. anna: while that was seen in the 90's and the 2000's as something that was, you know, almost religiously defended, now not
many voices are saying when you have not independent central banks, but there are questions about how fiscal policy needs to respond, is coordination a gentle chip away at the kind of independence? or is coordination ok and that takes us to the dangerous helicopter money? particular,in independence is really say sacred. and the fact that i think japan will probably engage in helicopter money over the next 12 months, ecb may well follow. if governments are not really ready to provide the fiscal stimulus than central banks might have to co-opt it and engage in helicopter money which impinges on central banks. anna: we will talk about mobius, japan. sticking with the united states, this all takes place in jackson hole wyoming, taking place in
the run-up to the u.s. election in november. do you think the politics is playing out, certainly talking about independence donald trump has not been quiet about the independence of central banks? megan: but that is also concerned, particularly in light of the donald trump victory, because he said he would audit the fe. d.they would like to avoid being seen to potentially influence the election, and the december i think we'll have a lot of policy of 30 regardless of who wins. and that could include the rate pass as well. anna: a lot of uncertainty with that election looming. megan green stays with us from asset management. let us bring you up-to-date with what is happening in italy. the death toll from wednesday's powerful earthquake has reached 150 nine. emergency services worked through the night to find survivors on the magnitude six
trevor. the prime minister has pledged a responset.ment thoughtsod to get your this morning. what is the latest situation on the ground in central italy? kevin: the latest is we just had an update on the number of deaths, in fact up now to 247. there are several hundred people who have been injured, and in fact there are thousands when we lost their homes. delivers 60 aftershocks which really affected the people. and this will go forth for a while now. anna: the death toll continues to ride. immediate focus on trying to find survivors and bury the dead, but what will be the futures for these mountainous villages. it was only 2009 we saw the big earthquake in this area?
kevin: yes, in fact there will be a major rebuilding effort running into the hundreds of million euros. and the people that have been watching closely, this is a rural area. the people there want to make sure they get the same kind of attention that people in bigger cities would. you mentioned the 2009 earthquake, in fact then prime minister silvio burroughs was hardly criticized for rebuilding effort. anna: there is already talk about how this will play into the political story in italy. to what extent do we expect prime minister renzi be judged on his ability to cope. berlusconi wasow judge. kevin: he was pretty harshly judge. renzi's 41 years old, very much hours after the
earthquake. he went up to see the affected site and he said the government would respond very. referendum a major in the automatic some people who want to judge him how he response to a leader, before they cast a vote. anna: kevin costello our and are joining us from italy. the latest on a devastating earthquake. we will update you through the program. here are some highlights on the economic front on the day ahead. at 9:00 u.k. time, we get the iphone survey out of germany. and it is u.s. initial jobless claims. and the data also do. is scheduled to give evidence and statements in san francisco related to the emissions scandal. and dominoes is planning the world's first commercial drone pizza delivery. but does a slice from above come with competitions?
welcome back. this is countdown. time in london is 6:21. hong kong is 121. hang seng fairly flat. chinese equity markets weaker this morning. let us get the bloomberg business flash. erie shery ahn. shery: shares in hp tumbled after the quarterly growth forecast fell short of $.37, lower.34 to than the estimates of $.40, as the printer maker struggles with slumping demand for its
products. chinese regulators are investigating a high-speed trading firm in connection with stock in the future dealings. they have received inquiries, related to futures trading at the chinese affiliates. they have been cracking down in the wake of last year's market. monsanto sent a letter field that it is withdrawing applications for indian approval of its next generation genetically modified cotton seeds. march it was in reevaluating the business in india, after cuts to royalties. the company says it will pull the obligation, because of regulatory uncertainty and ongoing discussion. pharmaceuticals fell 3% in new york after two of the patterns were invalidated in the u.s.
and multiple sclerosis drug that generates 20% of the israeli company's revenue. the patents were jams by rivals who want to make cheaper versions of the drugs, a decision on a third patent should be reached next week. new zealand led the world when the vote.men now, it is claiming another world's first, pizza delivery by drone. dominoes is joining forces with us-based self-proclaimed robot firstor for the world's commercial pizza delivery. the fast food company says it will start testing the service in new zealand later this year, and is also looking at drones in andemium belgium plan, in germany. that is your bloomberg business flash. anna: thanks very much. shery ahn joining us from hong kong. thailand's national oil
companies of the energy market is increasingly oversupplied, with new long-term contracts. the trend as it plans a new shopping spree. the company ceo told bloomberg expects crude prices to head higher. wefor the rest of this year, think that it will be between $45 and $50. and we will be planning to proceed with the price gradually growing up to $50 or $60 in the next few years. in the longer term, maybe $60 is something we should plan our investment on. of asset lifeeen management is with us. we have contrasting forecasts about where oil will go. that is coming from ptt, talking about increasing the oil price. many copies like to see that. on the other side, great on the bloomberg today, oil traders at
phibro recommending shorting crude at $50. you can find many opinions on where oil goes, and there are lots in the world. where do you see oil heading next? megan: yet, so i think oil will continue to be pretty volatile, because it is driven in large part by what is going in financial markets these days. but i do think that oil prices are stabilizing and will increase over the next couple of years. so, it is the hardest thing to forecast and the first thing that goes into every economic forecasting model, arguably the most important thing to get right. but i do think oil prices have huge implication for inflation globally, and if i'm right, if oil prices are going up, we will get news that is good. they are higher year on year, so we are used to seeing central banks missed the inflation target by huge amounts, and i think that will end actually. only temporarily, and will not be for structural reasons for physical reasons. anna: is the highlight of the
statistics going into the model, this comes from the story we have on phibro, talking about how oil has rallied 60% since simon green shield, who runs the company now, showing that rally in oil prices. u.s. natural gas in blue, crude in white. that is a significant increase. we are still talking about oil prices being relatively low, compared to recent history. and yes, a 50% rally. megan: that is right. and like i said, that will feed into inflation figures. but once again it will not be sustained. this is all based on a fact, going into next year i don't think we see that pressure. other influences in the u.s. our import prices, and that is dependent on the u.s. dollar. and i think we see the dollar strengthened. and of course a lack of wage growth in the u.s. in particular, and that is based on the huge glut of cheap labor globally.
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welcome back. this is countdown. a live shot of tokyo this morning. dollar-yenat on the as we head towards the jackson hole symposium. react.ht the boj more on that. a new edition of daybreak is now available on your bloomberg and on your mobile. the function will take you there. some of the top stories making this edition, the cover story they have gone with it south africa. sayingg, pravin gordhan growth will be close to zero cannot be 9% forecast in
the february forecast. report to police, he said he has done nothing wrong in that regard. we will get analysis from south africa. heated debate going on right now. let us know story, if you know any different. on another story covering daybreak, phibro's ceo, as it were discussing with megan green, shorting u.s. crew and $50. and finally, daybreak folks at how vw plans to fix about 80,000 emissions cheating cars. that is a fluctuation in the msci asian-pacific over the last two weeks, the most muted since 2012. as investors wait to see, janet yellen. and for more on the markets more
broadly, nejra joins us. markets coiled like a spring highps, or at least very level anticipation from what might hear from jackson hole. nejra: we are seeing volatility u.s. europe, and asia as well. this is the msci asian-pacific index volatility, taking all elected 2012. because as you say, these fluctuations in the past two weeks have been the most muted in four years. the 10-day volatility level most muted, the gauge at 0.2% on each four days with investors speculating ahead of jackson hole. and trading was light in august with volumes down. now, if we take a look at the dollar index. well, the dollar rally really losing steam. the bloomberg dollar index snapping a four-day winning streak, of course as we gear up for janet yellen's speech in jackson hole.
but the dollar is headed for the first weekly gain in more than a month versus the yen, presumably on expectations of a policy divergence.i have the implied dollar-yen volatility, spread one month is near the highest since july. and equity volatility is coming down, currency volatility has been rising if you look at the jp morgan measure of volatility. volatility has actually jumped the most in a year, earlier this week after stanley fischer became the latest set official to flag that rate rates could be rising by december. a premium by the chart, actually widening, highest since july. now, goldman sachs sees the yen, pound, and new zealand dollar as most horrible to a potential surprise from janet yellen, the reason being they see these currencies have the most theitivity to change two-year difference rate differential. and if speaking of the two-year yield on the treasury, poised
for the highest close since june. that is hawkish expectation lifting short and rates. if i take you to this chart, taking year bond yields, it all the way back to 2008. because this spread has been tightening, the premium of that two-year yield is the smallest since 2008. anna? anna: now, is it the end of the crew rally? ceo ofatively new phibro recommends shortening crude and $55. we discussed this. and for more, middle east anchor yousef gamal el-din game with a chart of the hour. you have a big oil company over in thailand, heating prices going up, and we have a forecast this morning. yousef: absolutely, anna. the latest comments come from simon greenfield, as you said
and this is interesting because phibro, is a very long-standing track record, used to be one of the largest standing firms of its kind, used to be one of the largest u.s. refiners a one point. simon bought in a very interesting time, and that is what listen to him when he says things about oil. this shows you that simon, when he steps in to guy cipro, he stepped in white when oil prices were bottoming out. we highlight brent, 30 in january. he buys the firm, and then look at that rally. 50% rally after buying cipro. now keep in mind, his comments include, well, listen. opec production cuts not going to happen, or unlikely to have in your he thinks that the fundamentals remain bearish. overall, he would rather sell and rallies than by on this. and he sees the glut persisting through 2017, but let us see whether his calls this time
around. we know his previous performance is not an indicator of how things will pan necessarily out in the future. anna: that is a small print. yousef gamal el-din joining us from dubai. helicopter money for japan is on the way. the veteran investor speaking to bloomberg news suggested more action from the bank of japan should be on its way soon. >> japan is the leader, and a sense that what japan is doing is having a global impact, and the experiments that japan is trying is being watched globally. so, in many ways, japan is sort of a leading indicator of the rest of the world. engage in helicopter money with great care and great reluctance, and of course if they do it to carefully you will not have any side effects. that is the dilemma they are
facing. they're going to be much more respectful and it probably will 90, until the yen reaching before taking action. mobius with his thoughts on japan. megan green, chief economist is here to give us her thoughts on japan. interesting linking jackson hole and we might see from the bank of japan. you can imagine a scenario, as mark mobius suggested there, where we get something more dovish the markets were strengthens, and that might prompt helicopter money. megan: i think it is very probable that japan will dip in. the question is when? unlikely to would do in september, they might wait to see if the fed will do some work for them. by tightening, see if there is a
currency effect. we will see. but i do think they will have to do more. the maker by more equities, they may try to make rates more negative, but that has been a disaster. wildly unpopular. i think they might try more of the same before they decide to go ahead and engage in helicopter money. i do think japan will be the first though, in large part because there is a first mover advantage in currency, and the central bank and the finest is or is really concerned about that. i think sing the yen strength in the on 95 on the dollar, that would probably spark something. anna: do you think the boj would maybe do negative rates, other factors involved, but if you look at the sense, it is not weaker. medication around negative rates, i have had comest from the boj
lehman to me. they had trouble initially. there was a lot of vagueness around how negative rates would work. and i think i had a huge impact on how the yen reacted to it. i do think the helicopter money would be more effective. but they have to be very clever about how they do it. they have had cash rebates for example in japan, people just stick it right into the bank. japanese save, on average. it will have to engineer it so japanese are actually incentivized to get into the economy. it could come in the form of vouchers that would have to be used, that would be a sure way to do with. but have to be careful about how they engineer. anna: helicopter coming many ways, directly putting money into people's pockets, using vouchers, or putting money into company's pockets. using the more likely that the divan would be something -- megan: i think it probably should be actually, but the trick is going to be to convince
the consumer to go out and spend it rather than just taking it in the bank. one of the most effective things about helicopter money is to get around the banks entirely. and if that monetary transmission is totally broken, which it is a most of the developed world, this is a way around that. but it does not work if people put in a savings account. anna: do you like this world? megan: i think helicopter money is a lot less risky than negative rates. i know it is controversial. but it is a better option than something we have already tried. anna: helicopter money might be discussed in wyoming, even if it is not on the fed radar, discuss conceptually because you say it is a very rather academic event. megan green, asset life management, statement. south africa's pravin gordhan was summoned in connection he oversaw an illicit unit to spy on politicians when he ran the state tax agency.
but he denied any wrongdoing. pravin: i have a job to do. and in a typical economic environment, i think i can. let me do my job. anna: that is pravin gordhan speaking last night in johannesburg. let us get more from our south african reporter, amo. you have your analysis. is pravin gordhan painting the picture of someone back to business, a bit of a disappointing message about growth. he just want to get on with the job perhaps? amo: yes, exactly. what we do know is that last night, finance minister pravin gordhan did make a speech. and he was very frank saying that the economy, it is unclear if they will grow this week. the south african reserve bank has already stated it anticipates the economy has 0% growth for 2016. pravin gordhan clearly saying he does not want to be the man for
the job, but he has overlook the economy in spirit in a positive direction. two other officials of course you are involved in this probe that the police unit is conducting have said they will submit themselves to the police this morning. but we have yet to see how exactly the story will unfold. anna: and how has the market been reacting to this? the rant coming under pressure? rand is clearly under pressure, further declining yesterday after finance minister pravin gordhan may that response on whether he will not appear. but what we are also seeing is that banking stocks are down by about 7.6%, and the stability abilityal the inside south africa. another thing we are seeing coming really strongly across is that traders do seem to be betting on the rate hike next year in south africa, this after the reserve bank had held rates for the past two meetings.
certainly seems that the rand downward spiral is making traders very uneasy as to where rates will be on hold or not. anna: amo, where does is go from here? we saw back in december how nervous investors became when they saw this issue with jacob zuma and the finance minister. more and more politicians are coming up to speed on this. yesterday, the former finance minister, who was the head when the finance minister pravin gordhan was heading up the tax agency, said it is clear that they may have to step in. call all of the projects and find out if there is enough evidence to bring charges. the law must take its course, however we cannot be paying quick and fast. we saw happened with the finance minister when he was fired in december of last year, and he
basically said that we have to be aware that the life of south africans, the quality of life of south africans is at stake. and it is in the hands of people currently involved in the probe. mbatha doing his this from johannesburg. giving a downbeat on the growth sector, now answering questions on his own involvement. i was drawn to a story today talking about how politics is interrupting the trade we are seeing in markets. ubs,e a chart here from measuring carry trade performance, dropping from this year's performance or highlighting how politics can be so damaging i suppose you're looking to make money from varied interest rates, the politics and get in the way. megan: it absolutely can do a
lot is being given by politics, not a lot of policy. but i do think that what we are seeing is a lot of investors stepping to the sidelines in deciding they're not going to get involved as long as there is so much uncertainty. in the past we had bowls and bears. now we have a large part of politics and a large part of countries, just not sure to stay on the sidelines. usually, i think analysts think that is response to indicators. by thing that is actually driving economics. anna: tell us about uncertainty. using the nature of uncertain markets is changing. megan: i do think we are at a decade-high. anna: do not always feel that way? megan: not to the same degree that we do now. for example, consumer confidence expectations are very difference from what we feel about our current situation. so we are more optimistic about where we are now. but actually our expectations going forward are totally flat. find an at at 10-year
high in terms of a neutral cause. but i do think we are in a different period weather is a lot of uncertainty. a lot of investors just staying out of the market. anna: and low yield environment and the hunt for yield adds another dimension. you draw the distinction between just uncertainty and if your bearishness, making this not the same thing. megan: it is incredibly distinct. i think we have a new class of investors because they cannot work it out either way. even as a professional colleagues, often only forecast we come up with a forecast a year from the looks just like we are now. no one is going to make a call. anna: megan green stays with us. coming up on countdown, china's bad loans. we take a look at the nation's second-biggest lender. and jackson hole hold up, markets await janet yellen. what will they offer? we look ahead to the big speech. and mark mobius things it is happening, but is it even
anna: welcome back. this is countdown. 6:49 in london. 1:49 in new york. we are basically in a holding pattern only get u.s. trading, if those futures are to be believed. fairly flat is the expectation for what the u.s. open might look like. we are all looking ahead to jackson hole of course. let us get the bloomberg business flash. here is stephen engle. shares in hp tumbled after hours on the quarterly growth forecast that fell short of estimates, expecting a profit of $.34 to $.37 a share, lower than the estimate of $.40. .hat is as the printer chinese regulators are investigating a high-speed trading firm in connection with stock index futures dealings
last year. related toquiry futures trading at the shanghai-based affiliate. china has been cracking down on high-speed traders in the wake of last year's stock market rally. thailand's national oil company said the energy market is increasingly oversupplied with prices falling and new long-term contracts ever more rare. however, they aim to buck the trend as it plans on a new shopping spree. the company telling bloomberg that they expect crude prices to go higher. >> for the rest of this year, we think that it will be between $40 and $50, and in the best case, we will be planning to see the price gradually going up to $50 and $60 a year. but we are seeing the longer-term maybe $50 is something we should plan our investment on. stephen: new zealand led the
world when it gave women the vote and introduced inflation targeting, now it is claiming of the world's first pizza delivery by, drone. domino's enterprises has joined forces with a u.s. self-proclaimed flying robot operator for the world's first commercial drone pizza delivery. the fast food company says it will start testing in new zealand later this year, also looking at using drones in australia, belgium, france, the netherlands, and germany. and that is your bloomberg business flash. brought to you by drone from hong kong. anna: thanks very much. one delivery you want to arrive the right way up. stephen ingles in hong kong. earnings from china's second-biggest bank out today as amounts.av joins us forangner
analysis. great to have you on the program. china has a debt problem. the shadow banking sector is large. many people warn about it. you are not quite so trouble. why so? christopher: shadow banking is a problem across the world really. if you think this last year janet yellen was saying shadow banking is a problem in the u.s., and there was recently a bank international settlement study that showed over 80 trillion u.s. dollars in shadow banking assets. shadow banking being anything to be will not from banks themselves. when you put that into perspective, china's $3.5 trillion of shadow banking loans are not a big after all. so i think people over-that little bit. anna: ok when you put the number into context for the world's second-largest economy you are not so concerned, but on the other hand they have another issue, maybe not facing the lehman moment, but what are the negatives? christopher: well, they have
nonperforming loans going up. you will probably see this in the earnings results coming out. loans,consider doubtful not just the was a really nonperforming, it is already 5% of the book. something like that. it might not be the 10% that some people are saying. but it is still very high. and that will eat into profits which means lower dividends, causing capital to drop. they already have a low capital base, considering the capital base compared to other countries. so they will need more equity. shareholders should not be very excited about it. but the liquidity problem that brought the lehman collapse, brought the collapse, the crisis in the u.s., that is not a problem in china. thean, look, french banks, loan ratio is over 230%. that means they have loans equivalent to more than 200% of deposit. whereas chinese banks it is 65%.
they do not have a liquidity problem. anna: ok, thank you very much. marketpher langner, gadfly. he joins us from singapore with analysis on the banking sector. economistne, chief still with us. as we wait for the earning seasons to kick off then, however present is the concern about cheney's banking fees? we were all generally worried about china in general. megan: and i think that sentiment has probably overcorrected. onvestors were's far to bullish. the bankingat sector, good news. the good news is that the government controls a lot of them. they can do right down. the question is how controlled can they make these write-downs. we have never seen the size of deleveraging the china has to go through before. that is ready for the risk. and what i have learned covering
every debt crisis i've ever covered the longer you push off these losses, the bigger they tend to be. term, not an interest. but i think it becomes bigger and bigger the more you do not deal with this problem. anna: and what is at risk look like. chris said they don't have a liquidity problem. quite the same way the western banking sector does balance sheets in the run-up to the lehman crisis. megan: and another factor is the central government in china as a fairly low level of debt to gdp. so it can step in to bail out the banks. and it has done that before the past couple of decades, and the risk of that though, i mean we know in the u.s. how painful it is to have the government step in and bail on the banks. but the risk is that the chinese government ends up saving all of these banks, coming zombie banks. anna: megan, thanks for spending the last hour. megan greene, chief economist here with us on the program. 6:56 in london. up next on countdown, janet at
anna: waiting in wyoming, the jackson hole supposed them is set to kick off as investors see clarity from the fed in its mixed messages from officials. ready to drop. mark mobius says helicopter money in japan could come as soon as next month. let me do my job. that is the mantra from south africa's finance minister says he will not obey a police order to present himself for questioning. this sending the rand on a volatile ride. >> if i was an american citizen, i would not vote for hillary clinton if you paid me. in fact, i would not vote for hillary clinton if she paid me. uk's -- donald trump on
stage at a rally in mississippi. year -- he urged supporters to vote against the "establishment." ♪ anna: welcome to countdown. this is 7:00. let's talk about where european equity markets might open up. the asian equity picture was let . the chinese equity story is a weaker one. asia is generally flat. perhaps a little bit of a downside, essentially not going anywhere. the expectation for where equity markets will open in an hours time. let's bring up the risk radar. financial markets in a limbo state as we wait for jackson hole and what janet yellen might say. the dollar rally is running out of steam.
a four-day winning streak, just felt hawkish just -- just out hawkish will janet yellen be? policy being discussed across the atlantic and across the pacific. what will all of this talk in jackson hole do with all of the currency? down by 1.1% since an earlier part of the day. .ow down by .9% questions around whether the government is good to take action to reduce speculative activity. crude is in there because -- as today's session on the back of a surprising data, 46.88 is where we are on wti. --have seen and expected stockpile weighing on stock prices. we head toward jackson hole, the 10 year u.s. yield is 1.55%. the german and japanese yield have the desk and negative.
-- in negative. let's get to bloomberg business flash with steve engle. >> mark mobius said helicopter money will be japan's next big experiment and it could happen next month. exhibit chairman says easing measures have made people save rather than spend a borrow. he says that combined with the strong yen will force the bank of japan to contemplate a policy -- rejected. >> they will engage in helicopter money with great care and reluctance. carefully, itto will not have the same side effect. steven: investors hold more than $25 billion from hedge funds last month. the biggest monthly reduction since february 2009. total outflows this year are close to $56 billion given by
mediocre performance. hedge funds have faced mounting criticism from clients over costs. short thist time to year's accrued rally, that is according to the new ceo of a phibro. the firm that was once the largest independent oil finder in the united states. traders would short the pti crude. he also thinks members of opec will not cut output. former u.k. independent party leader, nigel farage, appeared on stage with republican nominee donald trump in jackson, mississippi. he spoke of britain's decision to leave the european union as a positive example and urged trump supporters to get out to vote against the "establishment." >> if you want trade in this
country, you better get your walking boots on. you better get out there campaigning and remember anything is possible if enough decent people are prepared to stand up against the establishment. thank you very much indeed. >> the issues we face here in america are similar to the issues faced in britain during or membershipum, in the european union. >> the death toll from a powerful earthquake that hit italy yesterday has risen to 247 according to the country's civil protection agency. the magnitude six tremor that the centerlattened of three ancient towns and feared many more victims may be buried in the rubble. one of the world's longest running armed insurgencies is
officially over after columbia .eached a deal with rebels five decades of fighting left hundreds of thousands dead and many more displaced. the agreement legitimizes the rebels ring allowing it to contest upcoming elections. columbia says the key vitamins will add a 4% growth -- 4% to growth. global news, 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries. can find more stories on the bloomberg at top . i'm stephen engle. this is bloomberg. anna: stephen engle with the latest news. let's stick with hong kong and talk to juliette saly. little measly as we head toward jackson hole. .uliette: absolutely i got asked earlier if i am holding my breath as i don't know anyone who can hold their breath this long. investors have been waiting for this speech.
we have seen a little bit of action coming through on asian markets, the nikkei has closed down around point .5%. -- .25%. the price gauges between hong kong and japan. very muted compared to where they normally are. the most muted since 2012. the shanghai asia market is the weakest market in the region. this is on reports that shanghai could but more curves into the property market to try and pull these surging house prices and the divergence we are seeing in cities like shanghai, versus home price in other chinese cities p we have seen some weakness. hong kong looking better than it ago.n hour a lot of companies come through with earnings. alex the entertainment actually reported a 22% rise in the
second quarter earnings, a lot better than the market was looking for. worth noting the energy producers in hong kong have been under pressure. we have that weaker crude price. australia, the asx 200 has closed lower i .33%. materials leading the market down. there have been some upside in the southeast asian markets today. in terms of looking ahead to janet yellen speech, we have been watching the currency markets. goldman sachs sang out of all of the asian currencies, the kiwi's most vulnerable if we do see some more hawkish comments. you can see the kiwi up by 9%. saly.thank you juliette the jackson hole symposium kicks off in wyoming today. investors will be listing for clues. with the market pricing in a hike by the end of the year,
bloombergs michael mckee sent this report. michael: the fed has been holding this oppose him for 40 years. 38 of them, -- or did not attend. twice ben bernanke weighed out desolate out policy -- laid out policy. the betting is she will not say much. she will preserve for options. the fed was to see the economic data before it has to make a decision at its next meeting, september 21. sam fisher and the bill dudley suggest the september meeting is live. yellen might say that but whether or not she suggests the fed is close to an interest rate increase is something we will find out on friday. michael mckee, bloomberg, jackson hole, wyoming. michael mckee, primed and ready at jackson hole.
the symposium where we will hear from a host of that officials, dennis lockhart. some big names on the agenda. that spring into the , tapan datta. there is an expectation she might give us clues. there is something you hear from investors. megan greene said we should not expect too much. on a few occasions that we've had clues as to the very near direction of interest rates. tapan: the date should be put to rest. we should not expect singles from wyoming to tell us very much. this'll emphasis of the wyoming gathering is to discuss the framework of monetary policy in a very difficult economic environment. it is really about neutral,
so-called equilibrium interest rates. just the way the fed can indicates with the market which is -- which is been a sore point. that is a drove the feds can indication aspect in terms of being quite inadequate. anna: it is a very academic event. resilient monetary policy framework for the future. will hear a lot of the test we will hear a lot of the academic talk around it. we should not look for mixed sentinels -- mixed signals around september versus december. lifting short in rates in the united states. the work function only shows a 64% chance now. the rate hike by the end of the year is only 54%. it doesn't seem increasingly the
short end of the yield curve is positioning for a hike. if the get something dovish from janet yellen then, do we risk the market volatility? tapan: i think we do. to the extent that the market is pressing itself possibly one rate hike. the real problem is the market is not priced for rate hikes in the way that the fed would've anticipated over the next three years. because the fed keeps telling us the long-term interest rate is about 3%. the market is defined that in saying we're lucky if we get to two. that is where the real debate is. the key question is whether we -- no, that is stalling. runway.at is on the we are talking about
whether we achieve one. it is like watching a bad soap opera over a series of episodes where you know it how it is going to win -- know how it is going to end. anna: this is going to be a symposium of -- that is what is all about. what we might hear and what we have been hearing from central-bank players is come on governance, physical actors you need to step up. cap inchoate that is an interesting question. if you look at both sides of the presidential election divide, both sides are saying step up and infrastructure spending. one of the difficult considerations is whether that is going to come. we know there are issues on whether congress will approve it. all legislators agree that more -- that the u.s. should be spinning more on infrastructure but will the legislators play ball? if we do get that spending,
monetary policy does have to work so hard and keeping the economic show on the road. they can progress on the rate normalization a little more quickly. that is the big question. anna: the big challenge is if there is more fiscal spending and structural reform in europe, globally, what can those assembled at jackson hole really do that will make a material difference. i spoke to megan greene about how you might become positions about changing inflation targets. does any of that matter to you? totally. rather than thinking about -- the big debate is really what happens to that interest rate over the next five years and the way the former guidance has signaled failure. -- communication strategy is it will be a huge amount of debate on whether this might be
misleading the message passing through the market. how much damage it is doing? try to normalize rates, they risk another bond market shock, because the mom markets are not priced for that. just because the bond markets are not rights for that -- because the bond markets are not priced for that. the bond market will say zero to infinity, that is what we should expect from the fed. that would be counterproductive. that challenges very large. us.: tapan datta stays with up next, free money on the way for japanese consumers? for the strength in the yen might force the boj's hand. this is bloomberg. ♪
a gloomy overcast london side this morning. the pound is fairly flat, 132 point 48. here's juliette saly. juliette: shares tumbled after hours on a forecast that fell short of estimates. 34.237,ted a profit of lower than estimates of $.40. the printmaker struggled with slumping demand for its product. chinese reg latest are investigating a dutch high-speed trading firm in connection with stock index futures last year. there received inquiries related to futures trading at its shanghai-based affiliate. china has been cracking down on high-speed traders in the wake of last year's work at rauch. thailand's national oil companies says the enzi market is increasingly oversupplied. prices falling and new long-term -- thets -- pvt claims
company's ceo tells bloomberg that he expects crude prices to head higher. year, wee rest of this 50 --it will be between 45 to 50. we plan to see the price gradually going up to $50 to $50 in the next few years. in the longer term, maybe $50 is something we should plan our investments on. juliette: new zealand led the world when he gave women the vote and introduced inflation targeting. now it is claiming another world first, pizza delivery by drone. domino's has joined forces with the u.s. based flying robot operated -- for the world's first commercial drone pizza delivery.
the company said it was to testing the service in new zealand later and it is also looking at using drones in australia, the netherlands, japan and germany. on that note, that is your bloomberg business flash. pioneers of pizza delivery, think you very much juliette saly. mark mobius says helicopter money for japan is on the way. to bluebird news, he suggested more action from the bank of japan could be on its way soon. >> japan is the leader. what japan is doing is having a global impact and the experiments that japan are trying will be watched globally. in many ways, japan is a leading indicator for the rest of the world. money withelicopter great care and great reluctance and of course as they do it to carefully, it will have the
desired effect. moreare going to be much circumspect and they probably will wait until the yen reaches 90 before taking action. tapan datta, d.c. any merit in what mark mobius it -- do you see any merit in what mark mobius is saying? that could provoke some response from the boj and that could mean look up to money? tapan: the yen has been disappointing that it has strengthened despite all of their easing. the economic conditions are not yet quite right for that. it is something they will hold in reserve. i think my message is not quite yet. anna: what about the economic conditions. what we hear from kuroda, they talk about how it is not legal,
allowable by japanese law. tapan: hopefully he can work around it. the issue is because it was unpleasant, japan what some -- went through some thing similar in the 1930's. there are, causes behind this but it did in the badly -- there are historic causes behind this badly.did and it is difficult to go full on to helicopter money. some elements to resemble helicopter monday. that's helicopter money. -- helicopter money. the other conditions would have to worsen much more. butstrengthens remarkably those conditions are not quite there. anna: it is not enough? tapan: the rest of the world is
missing the inflation target. look at europe. that alone is not reason enough. anna: you say you see signs already of something like helicopter money. they are doing this already. look at the relationship -- the proportion of government debt byng barth -- being bought central banks globally. kevin: -- cap in -- cap in -- tapan: you can imagine what that is going to do in terms of the risks that you take. that and badly. japan is experiencing. it is gone the full spectrum in terms of bonds, you name it. they are trying it. the full underwriting of the government bond market, that we
are still some distance away from. creativitylicopter -- at jackson hole? tapan: i think it will be discussed. resembles that classic monetary policy trap, a huge amount of liquidity that is been trapped in the financial system, not reaching the real economy. anna: what about -- it seems that they and his three arrows abe industry arrows? considerably, -- especially is difficult is that is a multi-tier turnaround. japan cannot anticipate china's growth rate would have in five years. it has been hit by circumstances
which do not help the case. the issue is we are still in a situation where the economy is growing. that monetary policy traction is very limited. it is not a great place to be. we need to use all of the imagination to get the economy moving. anna: with the helicopter money we can the yen? ip co--- cap co--- tapan: think it would. anna: -- tapan: if you do too much of it, then you risk a yen collapse. too much of it which is what happened -- too much money printing, the market doesn't believe it. not just going to reverse but falling very sharply. -- : the public psyche
manus: welcome to "on the move." is 8:30 in berlin. we are down to the european market trading day. i manus cranny, and alongside me is caroline hyde. global gathering. the jackson hole symposium is set to kick off as investors seek clarity from the fed. ready to drop. mark mobius says helicopter money in japan could be a month away. hedge funds clipped, the new report says